Merck’s Momentum: Analysing the Potential Upswing in this Pharma Giant’s Stock Price

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Merck & Co (NYSE:MRK) shares are in a strong uptrend right now. Over the last three months, they have climbed from around $104 to $127. Here, I’m going to look at analysts’ target price for Merck & Co. Can the pharma stock keep rising?

What’s driving the Merck share price?

Before I reveal the target price for Merck, it’s worth looking at what has been driving the healthcare company’s share price higher recently.

One factor has been bullish broker activity. In early January, analysts at Citi named Merck as their preferred global major pharma company, replacing AstraZeneca after nine years. Citi noted that Merck had executed a series of value-enhancing bolt-on deals like the $5.5 billion deal with Japanese drugmaker Daiichi Sankyo. It also said that Merck’s near-term profit could be aided by US regulatory approval for a bladder cancer treatment as well as approval and launch of its experimental hypertension therapy, ‘sotatercept’.

Merck & Company Inc. Share Price (MRK) Quote & Overview

Shortly after this development, analysts at TD Cowen upgraded the stock to ‘outperform’ from ‘market perform’ on the back of its growth prospects. Its analysts said that Merck has several events in 2024 that have ‘billion-dollar potential’, including approval and follow-up data for sotatercept. It added that Merck’s cancer immunotherapy, ‘Keytruda’, could grow for at least another three to four years despite looming patent expirations.

Another thing that boosted the share price was the company’s strong fourth-quarter results, which were released in early February. These results were better than expected due to strong demand for Keytruda, which is now the world’s top-selling prescription medicine. For the period, revenue came in at $14.63 billion, up 6% year on year, and ahead of the consensus forecast of $14.50 billion.

Looking ahead, Chairman and CEO Robert M. Davis said that he was confident that the company’s strong momentum will continue. It’s worth pointing out that the company doubled its forecast for sales of its new cancer products to $20 billion by the mid-2030s. It also lifted the outlook for its cardiometabolic products to $15 billion from $10 billion.

What is the Merck & Co stock price forecast for 2025?

As for the target price for Merck stock, many brokers currently have 12-month targets in the $130 to $150 range. At the lower end of this range are brokers such as Wells Fargo and TD Cowen, which have targets of $130 and $135 respectively. At the higher end of the range are Barclays and UBS, which have targets of $145 and $148 respectively. These price targets indicate that Wall Street analysts expect the stock to continue rising.

Is Merck stock undervalued?

Even after the big share price increase recently, Merck stock is not expensive. With analysts expecting the company to generate earnings per share of $8.53 for 2024, the forward-looking price-to-earnings (P/E) ratio is only around 15. That’s well below the US market average. It’s also lower than the earnings multiples on many other big pharma stocks. This suggests that Merck shares still offer some value at present.

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